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Disgraced former Mayor Catherine Pugh possessed just 8,216 copies of her self-published “Healthy Holly” children’s books ― but resold those repeatedly, netting $859,960, federal prosecutors wrote in a new sentencing memo.
In the most detailed accounting yet of Pugh’s fraud scheme, assistant U.S. attorneys Martin J. Clarke and Leo J. Wise laid out in the Thursday filing how the onetime Baltimore mayor “methodically expanded her illegal scheme and managed to conceal it.”
“Unlike some convicted fraudsters, Pugh’s decision to con book purchasers was not an impulsive one, nor the desperate act of someone facing financial ruin,” the prosecutors wrote. “Rather, it was a well-considered business decision.”
The accounting was included in documents as prosecutors argued Pugh should receive nearly five years in federal prison after the Democrat pleaded guilty to four counts of conspiracy and tax evasion in November. She is scheduled to be sentenced Feb. 27.
Steven Silverman, one of Pugh’s attorneys, said his team filed its own sentencing memorandum that disagreed with the government’s sentencing recommendation.
Pugh resigned in May over her sales of the children’s book series, which The Baltimore Sun began exposing in March.
Pugh sold the clumsily produced books — which contain grammatical and spelling errors, such as a main character’s name being spelled two different ways and the word “vegetable” appearing as “vegetale” — to the University of Maryland Medical System and others under a deal to distribute them to city schoolchildren. School officials, however, said they hadn’t asked for the books, never used them for instruction and had thousands sitting unread in a warehouse.
In the new filing, prosecutors say Pugh began behaving corruptly almost immediately after selling her first batch of the books. They said she failed to print thousands of copies, double-sold thousands more and took many others to use for self-promotion.
“Like other advance-fee scammers, she falsely promised to print and deliver books commensurate with what purchasers paid her, and then simply kept their money,” the memo said. “Pugh misrepresented her intention to provide books to almost every major purchaser.”
In 2011, while still a state senator, Pugh was a member of the hospital network’s volunteer board of directors. She sold her first batch of “Healthy Holly” books for $100,000 to the medical system, promising to give them to Baltimore students. Pugh kept 2,110 copies, while 17,890 were delivered to the city schools’ warehouse, prosecutors wrote.
“To lower her costs and jump-start the business,” prosecutors wrote, "Pugh decided to steal the books that had been donated to Baltimore City schoolchildren.”
Pugh began double-selling the books, according to prosecutors. She resold 2,000 copies to Grant Capital Management for $14,000; another 1,000 to CareFirst for $7,000; another 110 copies to the Women Legislators of MD for $880; and 50 copies to the St. Mary’s Auxiliary for $400, according to the memo. Pugh resold another 200 copies of her first “Healthy Holly” book to Ariel Investments for $1,840 and another 990 copies to Kaiser Permanente for $4,950.
Prosecutors say Pugh never attempted to print more copies of her first “Healthy Holly” book. In total, she double-sold 2,350 copies that belonged to city schools to unlawfully pocket proceeds of $15,070, prosecutors say.
Corporate book purchasers with an interest in obtaining or maintaining government contracts — such as Grant Capital Management and Kaiser Permanente — represented more than 93% of all “Healthy Holly” books sold, the memo states.
In 2012, Pugh convinced the medical system to pay her another $100,000 to print a second book, called “Healthy Start for Herbie," prosecutors say. She printed 20,100 copies, keeping 1,400 for herself, with the rest going to the city schools’ warehouse. She then resold 3,756 copies to four unsuspecting purchasers for $26,840 between August 2012 and December 2015, according to the U.S. attorney’s office.
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Then, in 2015, Pugh once again persuaded the hospital network to pay her $100,000 to buy another edition of the series, called “Fruits Come in Colors Like the Rainbow.” She delivered 500 copies to her legislative office in Baltimore so she could readily resell or use them as if they were her own, with 19,500 copies going to the city schools’ warehouse, according to prosecutors. Prosecutors say Pugh then resold 12,250 copies to unsuspecting purchasers for $87,500 between December 2015 and December 2016.
In 2016, for a fourth time, Pugh persuaded the medical system to pay her $100,000 for 20,000 copies of a fourth “Healthy Holly” book. Pugh never printed the 20,000 copies for UMMS, but sold 5,000 copies to Kaiser for $25,000 and had those delivered to Kaiser’s distribution center, according to prosecutors. She also ordered an additional 5,000 copies for herself.
“Pugh exploited the fact that she could get away with not printing UMMS’s copies, but had to print Kaiser’s,” according to the memo.
After winning a close election over rival Sheila Dixon, Pugh became the 50th mayor of Baltimore in December 2016.
Pugh solicited another $100,000 from UMMS for a fifth edition of the “Healthy Holly” series in 2018, which was never printed. She later returned that check.
In total, prosecutors say, Pugh’s personal inventory of Healthy Holly books never exceeded 8,216 copies. Yet, she was able to resell 132,116 copies for a total of $859,960, the memo states.
“The defendant’s scheme to defraud is remarkable in both its scope and duration,” the prosecutors wrote.